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Bundles are (usually) a win for everyone.
So why do we hate them?
BUNDLING EXPLAINED
WHAT IS BUNDLING EXACTLY?
Bundling: Selling two (or
more) products as a
single packaged unit.
The best known example?
CABLE TELEVISION
PEOPLE HATE IT.
77% of Americans say
theyd rather buy
channels a la carte than
purchase cable bundles.
Source: tcrn.ch/2JBZZp3x
But there are good
reasons to like bundles.
CHRIS DIXON EXPLAINS.
Source: bit.ly/2ql0PXx
BUT FIRST, SOME DEFINITIONS
1 Reservation Price
The highest price a buyer is willing to
pay for an item.
Optimal Price
The price that maximizes the sellers
revenue.
Consumer Surplus
The reservation price minus the optimal
price.
2
3
Optimal prices are almost
always a little lower than
reservation prices.
Were going to assume 10% lower in this case.
IMAGINE TWO CUSTOMERS
SPORTS
FAN
SCIENCE
FICTION FAN
AND TWO CHANNELS
SYFY ESPN
But the sports fan also
kinda likes sci-鍖. And the
sci-鍖 fan kinda likes
sports.
SyFy ESPN
Science
Fiction Fan
$10 $3
Sports Fan $3 $10
Their reservation prices look sort of like this.
Seller: $18 revenue
SELL INDIVIDUALLY
Buyers: $1 each
consumer surplus
$10 reserve price, less 10%
optimal price discount equals
$9.00 per bundle
Seller: $23.40 revenue
SELL BUNDLED
Buyers: $1.30 each
consumer surplus
$13 reserve price, less 10%
optimal price discount equals
$11.70 per bundle
Thats the logic behind the bundle.
Done correctly, it leaves
everybody a winner.

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